U.K. stocks fell for an eighth day, their longest stretch of losses since 2003, as euro area borrowing costs climbed after a German bond auction fueled concern the region’s debt crisis is worsening.
Royal Bank of Scotland Group Plc and Barclays Plc both lost more than 3 percent as costs to insure government debt in Europe climbed to a record. Rio Tinto Group retreated 2.3 percent after a report showed Chinese manufacturing may contract and Australia passed a mining tax.
The FTSE 100 Index sunk 67.04, or 1.3 percent, to 5,139.78 at the close in London, extending the gauge’s loss since Nov. 11 to 7.3 percent. The FTSE All-Share Index dropped 1.3 percent, while Ireland’s ISEQ Index slid 1.2 percent.
“The headlines out of Europe continue to be negative and this is forcing many investors to move away from anything risky,” said Joshua Raymond, chief market strategist at City Index in London. “The German bond auction was a real shock to the markets. The lack of appetite for bonds naturally raises suspicion that perhaps investors are starting to question the strength of Germany.”
Borrowing costs climbed across the euro area after Germany, the region’s largest economy, failed to meet its fund-raising target at a bond auction today. Total bids at the sale of 10-year bunds amounted to 3.889 billion euros, falling short by 35 percent, according to data from the Bundesbank.
Banks tumbled as credit-default swaps insuring sovereign and bank bonds also climbed to records amid deepening divisions among policy makers over how to resolve the debt crisis.
RBS, Barclays, Lloyds
RBS lost 5.9 percent to 17.34 pence, Barclays slid 3.1 percent to 147.9 pence and Lloyds Banking Group Plc retreated 2.5 percent to 21.84 pence.
Mining companies also fell, sending a gauge of metal producers down for a fifth day, after a preliminary purchasing managers’ index showed manufacturing in China, the biggest consumer of copper, may contract by the most since March 2009.
The reading of 48 reported by HSBC Holdings Plc and Markit Economics for November compares with a final number of 51 for October. A number below 50 indicates contraction.
Separately, Australia’s lower house of parliament passed legislation for a 30 percent tax on coal and iron-ore profits.
The Minerals Resource Rent Tax Bill will probably be passed and become law early next year after a vote in the upper-house Senate. BHP Billiton Ltd., Rio Tinto Group and other iron-ore and coal producers face paying about A$11 billion ($10.7 billion) in extra charges in the first three years of the tax.
BHP Billiton, Rio Tinto
BHP, the world’s largest mining company, lost 1.4 percent to 1,741 pence. Rio Tinto, the second biggest, fell 2.3 percent to 2,985.5 pence and Vedanta Resources Plc retreated 2.7 percent to 929 pence.
Meggitt Plc declined 3 percent to 361.1 pence after UBS AG lowered its recommendation for the maker of engine-monitoring systems for Airbus SAS and Boeing Co. planes to “sell” from “neutral.”
Weir Group Plc slid 1.3 percent to 1,719 pence after the Scottish maker of pumps and equipment for mining companies agreed to acquire Seaboard Holdings Inc. for $675 million to expand in North America.
Glencore International Plc rallied 2.4 percent to 380 pence as Stoxx Ltd. added the commodities trader to its benchmark Stoxx Europe 600 Index. Joining a gauge can affect companies’ share price because funds tracking indexes need to adjust their portfolios.
Tui Travel Plc, Europe’s largest tour operator, surged 13 percent to 154 pence as analysts including Peel Hunt’s Nick Batram said concern over the future of rival Thomas Cook Group Plc may present an opportunity to gain market share. Numis Securities Ltd. also upgraded the shares to “buy.”
Thomas Cook rose 9 percent to 11.12 pence. The stock plunged 75 percent yesterday after a collapse in bookings caused the company to hold new talks with banks and delay its full-year results.